D1, D2, D3, D4, D Non-refundable carry forward tax offsets

Information on non-refundable carry forward tax offsets.

Last updated 8 August 2024

Non-refundable carry forward tax offsets reduce any remaining tax at T2 Subtotal 1. If the total of the non-refundable carry forward tax offsets at D is greater than the remaining tax at T2, the excess may be carried forward to a future income year. If the amount at T2 is greater than the total of the non-refundable carry forward tax offsets at D, the remaining tax is shown at T3 Subtotal 2.

Write at D the total of:

D1 Early stage venture capital limited partnership tax offset
D2 Early stage venture capital limited partnership tax offset carried forward from previous year
D3 Early stage investor tax offset, and
D4 Early stage investor tax offset carried forward from previous year.

If you did not write an amount at D1, D2, D3 or D4, leave D blank.

The tax offsets shown at D are not refundable.

D1, D2 Early stage venture capital limited partnership tax offset

An SMSF may be able to claim the early stage venture capital limited partnership (ESVCLP) tax offset if one or both of the following applies:

it is entitled to the ESVCLP tax offset in 2018–19
it has an amount of unused ESVCLP tax offset carried forward from a previous year.

D1 Early stage venture capital limited partnership tax offset

Is the SMSF entitled to claim an ESVCLP tax offset for contributions made during 2018–19?

No	Leave D1 blank. Go to D2.
Yes	Read on.

The SMSF's 2018–19 ESVCLP tax offset is the sum of its tax offsets based on the SMSF's contributions to the ESVCLP:

as a limited partner of the ESVCLP, or
through a partnership or a trust.

The ESVCLP must have become unconditionally registered on or after 7 December 2015.

If the SMSF is a limited partner of an ESVCLP, the SMSF's tax offset is limited to 10% of the lesser of the following:

the SMSF's total contributions to the ESVCLP during 2018–19 (certain exclusions apply), and
the SMSF's share (based on the SMSF's interest in the entire capital of the ESVCLP at the end of the current income year) of the sum of eligible venture capital investments made by the ESVCLP during the period starting at the start of the current income year and ending two months after the end of the current income year.

If the SMSF is a partner in a partnership or a beneficiary of a trust which has contributed to an ESVCLP, the SMSF may be entitled to an amount of ESVCLP tax offset. A written notification will be provided by the partnership or trustee of the trust setting out the SMSF's entitlement to this tax offset. If a written notification has not been provided, contact the partnership or the trustee.

Write the total amount of the 2018–19 ESVCLP tax offset at D1.

For more information on the ESVCLP tax offset and the eligibility requirements, see ESVCLP tax incentives and concessions.

D2 Early stage venture capital limited partnership tax offset carried forward from previous year

Does the SMSF have an amount of unused ESVCLP tax offset carried forward from a previous year?

No	Leave D2 blank. Go to D3.
Yes	Read on.

To work out whether the SMSF can carry forward an amount of ESVCLP tax offset from a previous year to 2018–19, see Division 65 of the ITAA 1997.

The unused ESVCLP tax offset carried forward from a previous year may need to be adjusted for any net exempt income.

The unused ESVCLP tax offset carried forward from a previous year is reduced by 30 cents for every dollar of unused net exempt income, provided the SMSF had taxable income for that year.

Write at D2 the amount of unused ESVCLP tax offset carried forward from the previous year, less any reductions, if applicable.

For more information, see ESVCLP tax incentives and concessions.

Legislation

Subdivision 61-P of the Income Tax Assessment Act 1997External Link

D3, D4 Early stage investor tax offset

An SMSF may be entitled to the early stage investor tax offset for the income year if the fund:

invested in an early stage innovation company during the year, or
has an amount of unused early stage investor tax offset carried forward from a previous year.

The maximum offset (including current year and carried forward prior year amounts) that the fund, and its affiliates combined, can claim in 2018–19 is $200,000.

D3 Early stage investor tax offset

Is the SMSF entitled to claim an early stage investor tax offset in 2018–19?

No	Leave D3 blank. Go to D4.
Yes	Read on.

Step 1: Work out the total amount the SMSF paid for eligible shares in early stage innovation companies in 2018–19.

If the requirements of the 'sophisticated investor' test under the Corporations Act 2001 are not met for at least one of the investments in an early stage innovation company during 2018–19, the step 1 amount must not exceed $50,000. If the step 1 amount exceeds $50,000 the SMSF cannot claim this offset.

Step 2: Multiply the step 1 amount by 20%.

Step 3: Identify the SMSF's entitlements to any early stage investor tax offsets as a beneficiary of a trust or a partner in a partnership that has invested in an early stage innovation company in 2018–19.

If the SMSF is a partner in a partnership or a beneficiary of a trust which has invested in an early stage innovation company during 2018–19, the SMSF may be entitled to an early stage investor tax offset. A written notification will be provided by the partnership or trustee of the trust setting out the SMSF's entitlement to this tax offset. If a written notification has not been provided, contact the partnership or the trustee.

Step 4: Add together the amounts at step 2 and step 3. This is the step 4 amount.

Step 5: Subtract from $200,000 the amount (if any) reported at D4 Early stage investor tax offset carried forward from previous year. This result is the step 5 amount.

Step 6: If the step 4 amount is equal to or less than the step 5 amount, write the step 4 amount at D3.

If the step 4 amount is greater than the step 5 amount, write the step 5 amount at D3.

The amount reported at D3 may need to be further reduced if any of the SMSF’s affiliates are entitled to the early stage investor tax offset (whether for investments they made in 2018–19 or carried forward from a previous year).

The maximum offset (including current year and carried forward prior year amounts) that the SMSF, and its affiliates combined, can claim in 2018–19 is $200,000

D4 Early stage investor tax offset carried forward from previous year

Does the SMSF have an amount of unused early stage investor tax offset carried forward from a previous year?

No	Leave D4 blank. Go to D.
Yes	Read on.

To work out whether the SMSF can carry forward an amount of the early stage investor tax offset from a previous year to 2018–19, see Division 65 of the ITAA 1997.

The unused early stage investor offset carried forward from a previous year may need to be adjusted for any net exempt income.

The unused early stage investor tax offset carried forward from a previous year is reduced by 30 cents for every dollar of unused net exempt income, provided the SMSF had taxable income for that year.

Write at D4 the amount of unused early stage investor tax offset carried forward from the previous year, less any reductions, if applicable.

Example: Calculating early stage investor tax offset

The Retiresoon SMSF has a carried forward early stage investor tax offset of $60,000 from 2017–18.

In 2018–19, the Retiresoon SMSF invested $500,000 in eligible shares in one early stage innovation company, and $250,000 in another. The Retiresoon SMSF meets the requirements of the sophisticated investor test.

The Retiresoon SMSF has gross tax of $180,000 at B, no amounts at C (non-refundable non-carry forward offsets) and no exempt income.

The amount that the Retiresoon SMSF writes at D4 is $60,000. It calculates the amount reported at D3 as:

Step 1: The total amount paid for eligible shares the early stage innovation companies in 2018–19 = $750,000.

Step 2: Multiply step 1 amount ($750,000) by 20% = $150,000.

Step 3: Nil – The Retiresoon SMSF has no early stage investor entitlements via trusts or partnerships.

Step 4: The Retiresoon SMSF adds the amounts from steps 2 and 3. The result is $150,000.

Step 5: The Retiresoon SMSF subtracts the amount at D4, $60,000, from $200,000. The result is $140,000.

Step 6: As the step 4 amount ($150,000) is greater than the step 5 amount ($140,000), the Retiresoon SMSF writes $140,000 at D3.

The Retiresoon SMSF can claim an early stage investor tax offset equal to the sum of the D4 and D3 amounts ($60,000 plus $140,000, totalling $200,000). Although the carried forward tax offset from 2017–18 ($60,000) and the current year tax offset of $150,000 (step 4 amount) equals $210,000, the Retiresoon SMSF's total tax offset is capped at $200,000 for 2018–19. The unused excess of $10,000 cannot be carried forward to future income years.

As the Retiresoon SMSF's entitlement to the tax offset ($200,000) is greater than its gross tax payable ($180,000), the unused portion of the offset ($20,000) may be carried forward to future income years (subject to the rules in Division 65).

End of example

For more information on the early stage investor tax offset and the eligibility requirements, see Tax incentives for early stage investors.